A broad-ranging study drafted by the Commerce Department recommends a coordinated government policy to halt the erosion of the U.S. electronics industry, department officials say.
Jack McPhee, director of the Office of Computers and Business Equipment, said the report calls for development of a coordinated policy led by the Vice President's Council on Competitiveness.He said work on the study, which was requested by the House Appropriations Committee, has been going on since last November.
"We are now putting the finishing touches on an initial draft to run around the policy areas at Commerce, with the obvious intention of eventually sending it to Congress after everybody has concurred on what it should say," McPhee said.
He noted that "many of the things that we recommend or concur with in the report are things that are under way or may be slightly beyond where things are, whether it's antitrust, or research and development policy, or science and engineering policy. . . . It's a very broad report."
McPhee declined to give further details on the study's findings, saying the report was not ready for public release.
The Council on Competitiveness, chaired by Vice President Dan Quayle, was established in late March to review regulatory and other issues bearing on U.S. competitiveness around the world. Its members include Attorney General Dick Thornburgh, Treasury Secretary Nicholas Brady, budget director Richard Darman and Commerce Secretary Robert Mosbacher.
William Krist, vice president for international trade of the American Electronics Association, an industry group, said he had reviewed a draft copy of the Commerce study.
"It portrays the electronics industry as a strong industry, having had really good growth. But that masks a deep erosion of competitive strength, because some other countries have increased their market share at a much more substantial rate and we've lost market share," he said.
Krist noted that "there's no simple solution to this. It's kind of a web of problems. It (the study) deals with a lot of these - trade problems, the cost of capital, erosion in the educational base."
"My impression of it is that it's a good report and one certainly I hope Congress will give a lot of really serious attention to," he said.
Oliver R. Smoot, executive vice president of another industry group, the Computer and Business Equipment Manufacturers Association, said that "regardless of what surfaces in Commerce's report, we have to keep in mind a fundamental fact about the competitiveness of the U.S. electronics industry.
"In some product areas, U.S. companies used to have 100 percent of the market share worldwide because they were the only ones that made the items. But in that situation, any competition from a foreign producer means the U.S. companies then have less than 100 percent.
"That's not inherently bad, but it's an early signal that the companies affected by the change must make changes in order to stay on top," he said.